The Contract Transformation in Land Use Regulation

Throughout the last century, land use regulation evolved into a system in which local governments would examine significant land use projects on an individualized basis and then impose conditions tailored to mitigate the adverse effects of those projects. Informal negotiations between local governments and developers often preceded approval of the projects. However, formal contracts were avoided, largely because of constitutional concerns about “contracting away” the police power.

In recent years, however, this situation has fundamentally transformed. Local governments and developers now often negotiate and then enter formal contracts that establish the terms governing individual projects. Developers favor such contracts as a means of achieving economic certainty for their projects. In contrast, local governments view contracts as vehicles for securing public benefits that they could not directly require from developers.

This Article argues that the use of the contract model has important, unrecognized effects on fundamental public law norms that underlie the land use regulatory system. The Article identifies six such effects: reconfiguring the status relationship between developers and government; imposing constraints on government’s ability to respond both to new information and changed circumstances; circumventing constitutional restraints designed to prevent local government from leveraging its monopolistic land use authority; increasing the likelihood that local governments will not treat similarly situated applicants equally; interfering with the implementation of planning as a means of rationalizing government’s land use decisions; and weakening the democratic norms of public participation and transparency in government decisionmaking. The Article concludes that the transformation to a contract-based land use system is jeopardizing adherence to these fundamental norms, and that states should take steps to more closely align the use of contracts with these norms.